Basel II

Basel II

An agreement on international banking regulations dealing with how banks handle risk. Basel II establishes risk management and risk capital requirements in an attempt to ensure banks remain solvent. Basel II consists of three pillars. The first deals with capital requirements and mandates that banks exposed to more risk (which is itself categorized and quantified) must maintain sufficient capital. The second pillar provides an outline that regulators can use to deal with non-quantifiable forms of risk. The third attempts to promote market discipline.

Commenting on QCB's commitment in implementing the Basel Committee's latest guidance and updating instructions to develop the banking system, Sheikh Abdullah said QCB has been, and will continue to be committed to most Basel Committee issues, starting with the basic principles, effective Basel II and Basel II capital adequacy standards, which were recently updated by all Basel III standards from January 2014 to April 2018.

The objective of Basel III requirements is to ensure the stability and resilience of financial systems in response to the global financial crisis through addressing some of the limitations in Basel II.

The Basel III capital adequacy standards include key amendments to the Basel II standards, primarily an increase in the total ratio of the regulatory capital and a redefinition of the regulatory capital as part of a package of criteria targeting quality improvement, he said in an exclusive interview to KUNA.

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